Triple Five principals appeared at a public meeting of the Riverhead Town Board today for the first time since the company signed a $40 million land deal with the town in 2018.
Triple Five chairman Nader Ghermezian and vice chairman Justin Ghermezian, a principal in the Triple Five shell company that controls Calverton Aviation and Technology, accompanied attorney Chris Kent to a town board work session this morning to express the company’s continuing commitment to its agreement to buy and develop most of the town’s remaining vacant land at the Calverton Enterprise Park.
“We’re here to provide the board with some documents and other further assurances of the purchaser, of the purchaser’s intent and financial ability to purchase and complete the development of the property. as required by the agreement of sale,” Kent said.
Kent presented the board with a letter from the public accounting firm Grant Thornton. The letter states the firm has confirmed, by examining a list of cash and equity accounts provided by the company, that “Triple Five Group of Affiliates’ cash balance at May 31, 2021 is in excess of $40 million for use in connection with” the purchase of the land from the town.”
Kent said he had already provided to the town’s outside legal counsel, Frank Isler, “a letter from a well-known and highly regarded commercial lender with offices on Long Island” stating that the lender will provide a construction loan of up to $120 million for the development of the first phase of the proposed urban renewal project.”
The lender imposed a confidentiality condition on the letter, Kent said. Because of that, it cannot be released to the town, he said, and “must be held in escrow” by the attorney “and may not be shared with any other party at this time, by direction of the bank.”
Kent said afterward the letter is a signed “offer and acceptance of financial terms” for the financing.
Isler confirmed what Kent said about the letter and told the board the nondisclosure requirement is not unusual “where we’re dealing with highly confidential information of a financial nature.”
The town will become the home of several large national and international companies, Kent said. “They will create desirable jobs and provide an economic multiplier effect by investment, employment and spending power that will come to the Town of Riverhead bay the development here at Calverton.”\
The town’s vision for the development of the property, as set forth in its urban renewal plan, will be achieved, Kent said.
“We are ready and able to close,” Kent said. Given the very active real estate market right now, the sooner the better, he said. There are opportunities that may be missed if it’s delayed too much longer. “Timing is critical.”
The town is not able to close because of the State Department of Environmental Conservation has imposed requirements on its issuance of two regulatory permits that the town is unable to meet. The town in February sued the DEC, seeking to have its “notice of incomplete application” set aside.
“What interest does Daniel Preston have in CAT?” Councilman Tim Hubbard asked, referring to the individual who entered into a letter of intent with the town to purchase the property in early 2017. Preston has since moved his operation to upstate Little Falls.
“Daniel Preston remains currently a 25% member of CAT,” Kent replied. “He’s a nonvoting member. He does not have any financial commitment to the development of the project. However, we expect and intend to utilize his connections and knowledge to attract development companies that may be interested in doing similar things that he was interested in doing at the site,” the attorney said.
“Do you now or have you ever had any talks or interests of putting a casino on that site,” Hubbard asked.
“No,” Nader Ghermezian and his attorney replied in unison.
“I have never, in my two years of representing them since February 2019, I’ve never had one conversation with any Native American tribe on the development of a casino — or any other parties on the development of a casino. There have been no conversation whatsoever,“ Kent said.
Hubbard asked about the company’s debt load and net worth, which he said has reportedly declined significantly.
“Triple Five Group consists of 100 companies,” Nader Ghermezian said. “They are all single-purpose entities. Every asset is in a separate company,” he said. “What is happening in the situation in the economy today has nothing to do with this property,” he said.
“The mall is open. It is operating and it is doing well,” he said. “Don’t believe these articles that they write.”
Hubbard asked if the buyer would be seeking Industrial development Agency benefits and if so, would it commit to working with the Riverhead IDA, rather than the county IDA.
Kent said Triple Five will be seeking IDA benefits — property tax and mortgage tax abatements as well as sale tax exemptions — and it will work with the Riverhead IDA. He reminded the board that the property tax abatement applies only to improvements built, not the land, so the buyer will be paying property taxes on the value of the vacant land. The abatements also do not apply to special district taxes, he noted.
Councilwoman Catherine Kent said “the recent financial news about Triple Five doesn’t give us confidence.”
She said Triple Five was deemed “qualified and eligible” under the State Urban Renewal Law “based on the development plan you presented.” She reviewed the history of the approval process and previous representations by Triple Five based on letters of interest that may or may not continue to be meaningful.
The councilwoman said she is calling on the board to request and require access to the company’s financial statements to ensure that the development plan presented by Triple Five during the qualified and eligible sponsor review “will be financed and completed.”
She also took exception to not being able to view the financing letter provided to the town’s legal counsel. “We received letters in the past and having a letter that we cannot view is not satisfactory to me,” Kent said.
“This property is our greatest asset,” Kent said. “We need to know that the development plan presented in the qualified and eligible hearing will be financed and completed.
“We are honoring the agreement that you have signed,” Nader Ghermezian said. “And we have done everything and anything that the agreement requires of us at this time,” he said. “Twenty years this land is sitting down there and nothing has happened. Enough is enough,” he said.
Supervisor Yvette Aguiar said she understands a company’s financial position can change over time. She said it does not make sense for he town to spend money on an accountant right now to do review financial information when there is no closing date. It should be done closer to closing.
Councilman Ken Rothwell asked if the company’s funds to be used for the purchase are “set aside checking account or savings account— non-invested funds that won’t be affected if the stock market goes down.
“It is liquid and available right now,” Chris Kent answered. “Things could change, so we’d like to move forward as quickly as possible,” he said. “We’ll be glad to provide further assurances when we get closer to closing when we have a closing date will be able to come in and provide more assurances, financially and developmentally,” he said.
Isler said the contract requires the buyer to present further assurances prior to closing.
Councilman Frank Beyrodt said the board was looking for “just a little assurance that your plan is stall able to be done.” He added, “Frankly I wait for you guys to start paying taxes in the Town of Riverhead.”
“This project, when it’s built, will reduce the taxes of every householder in this town,” Ghermezian replied.
Noting that she didn’t sign the contract of sale but instead “inherited” it, Aguiar said “there’s a lot of concerns” about the contract.
“Those 1,050 acres have to be protected,” Aguiar said. “I just want to make sure we have that assurance forever.”
Attorney Kent said there is no other option. The DEC would not allow the environmentally sensitive lands to be developed and the habitat protection plan requires it, he said.
At the conclusion of the discussion, former congressman George Hochbrueckner, who wrote the legislation that authorized conveyance of the site to the town by the federal government, stood up in the audience and asked to address the board about how he would be able to help the town resolve its differences with the DEC.
The supervisor declined to allow Hochbrueckner to speak with the board because he was not on the agenda. Hochbrueckner he had written to the board twice seeking a meeting but never had any response. Deputy Supervisor Devon Higgins told Hochbrueckner he could speak to the board at its upcoming regular meeting on Tuesday.
Hochbreuckner, a lobbyist, worked for the town in 2013 to reach an agreement with the DEC that allows development of 600 acres at the site and to get legislation adopted by the state that guarantees 90-day approval of development plans that conform to the town’s final generic environmental impact statement and zoning. He was paid $43,000 for his effort, he said.
“I want to help them,” he said in an interview after the meeting. “I have a solution to their problems. I want the taxpayers to benefit from it,”
Hochbreuckner said the current deadlock between DEC and the town is more complicated than the standoff in 2013, “but it’s still solvable.”
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